How to Start a Family Business
Family businesses have a powerful economic impact of a country, as more than 60% of all businesses are family-run. Such organisations have clear advantages over companies forged by a single person or partners outside one's circle. These benefits are often the pillars that support these businesses and lead to success: trust, affection and continuity. However, these are not the only factors to take into account when starting a family business. Keep reading this OneHowTo article and discover how to start a family business and achieve success.
When a family has a business idea and decides to carry it out, questions such as how to organize the family business, how to get financing, legalities, etc. are raised. In order to begin to tackle these queries, the first thing you should do is to form a general business plan. But what should be included in this planning? First of all, the family should identify the type of activity that will be developed. Establishing clear objectives is essential for starting a project. Determine the number of partners, tax obligations, social security scheme, third party liability and tax obligations that must be considered for the organisation of the family business.
Once the activity is established, you should begin to assess the risks and opportunities. It is therefore essential to conduct a comprehensive market research. This analysis should observe the current state of the market in which the activity will be developed. Do so by examining the degree of supply and demand and, above all, thoroughly studying both the competitors and the target audience. After this, the family must decide whether their project is viable or not.
Funding is a vital aspect for the project to go ahead; therefore, the business plan should analyse the family's financial situation.
After establishing the business plan, it is time to start making decisions. Whether it is a family business or not, every business should determine what legal status to have. The selected formula must focus on the family control over decisions and should ensure business continuity through the generations. Depending on the size of the company, the number of partners, financial needs, etc., the family must decide whether they are a Limited Society, Anonymous Society, Civil Society, Cooperative Society, etc.
Once the legal formula is established, the corporate bodies that will lead the company should also be determined. This step must be closely related to the type of society in which it will develop, since each one works in a different way. The family must determine the rights of each of the partners; establish a Shareholders' Meeting or Family Board; create a Family Council; select administrators; choose the people in charge of the annual and monthly accounts of the company, and note the Family Protocol.
To organise the family business properly and ensure its continuity, the family protocol must be clearly determined. In this sense, a Monitoring Committee for the Family Protocol must be created. This should be dedicated exclusively to resolving differences and doubts about the interpretation and practice of the protocol. Normally, this committee consists of three members of the Family Council.
When starting a family business, generational succession is one of the most important elements to be taken into account. In order to ensure family business continuity, the most appropriate candidate should be selected to take over and manage the family business when the current leader decides to retire.
In all businesses, conflicts arise during decision making or project management. Therefore, when trying to start a family business, it is important that you know how to deal with family business problems, which means that a conflict resolution plan is established. The family group will have to opt for the method that best suits them - a system of arbitration, mediation or neutral evaluation.
When starting a family business, marketing and distributing your product are key elements to ensure its success. Thus, it is desirable that some members of he family take charge of putting their business on the market and reaching the target audience. For this, a marketing plan should be set out, and the strategies to be followed should be determined.
A family business can not start without a good financial system. In addition to the capital provided by each family member, other options must be considered, especially when such financial availability does not cover all the expenses. At the beginning of any project, investment is always greater than profit. The advantage of family businesses is that, once they start to generate economic gains, they stay within the family nucleus and are used to pursue a financing policy based on reinvestment. This ensures the growth and development of the company
Establishing a good family business organisation from the outset is essential to ensure success and continuity over time.
If you'd like to read similar articles to How to Start a Family Business, we recommend you browse around our Legal category.